Obamacare: Exchanges, No Changes

June 28 marked one year since the U.S. Supreme Court upheld the constitutionality of the new health care reform signed into law by President Barack Obama on March 23, 2010.

While certain provision deadlines have come and gone and more are pending, a key date for many employers, including credit unions, will be Oct. 1. That’s when the federal government will open up marketplaces, commonly referred to as exchanges, to offer subsidies to the estimated 50 million uninsured Americans who can also start signing up for state-run health insurance programs.

With the torrent of information out there, some credit unions see the health reform law, which is commonly referred to as Obamacare, as a pivotal opportunity to not only educate employees about new product and service options but to also take an even harder look at where the benefits to the bottom line lie.

“We see it as a time to look at the benefits not as an entitlement program but as a benefit for the organization,” Webb explained. “If you have healthy employees who are educated about health care options, the employer wins because they have a healthier lifespan.”

The other benefit for SMCU is tracking the return on investment.

“This is also an opportunity to look more closely at our program and the dollars spent. Are we covering things we don’t need to?” Webb said.

So far, the biggest impact of the new law for SMCU’s 150 employees is the changes in flexible spending accounts. Currently, federal law allows individuals to contribute pre-tax money special accounts that they can use for qualifying medical expenses. Under PPACA, contributions are limited to $2,500 per year. Webb said she would prefer the previous maximum of $5,000 for those employees who want to pay outright for services such as braces.

Advocates of the new law say the change will likely not impact the vast majority of families because the average contribution to an FSA is approximately $1,200, and an estimated 14% of FSA users actually forfeit money at the end of each year because they’ve contributed too much, according to the White House.

Also under the new law, the Outcomes Research Institute fee – which funds research that evaluates and compares health outcomes, clinical effectiveness, risks and benefits of medical treatments and services – could slightly increase costs for SMCU employees in 2014, Webb said.

Health insurance issuers and employers sponsoring self-funded group health plans must pay $1 per member per year. The fee increases to $2 per member per year in the second year. Then, the fee adjusts based on the percentage increase in the projected per capita amount of national health expenditures.

Seattle Metropolitan CU offers 100% coverage to both fulltime and part-time employees, Webb said. Because it has what she calls a rich plan, which is not a high-deductible plan, the way PPACA is structured, the credit union can’t decrease its coverage costs. She pointed out that not all credit unions choose this route and if they do, coverage is very low.

“We’re locked into that rich plan. It’s not a problem now. It’s a benefit because we didn’t have to make any changes,” Webb said. “Our plan qualified under the health care reform but if we’re looking to cut expenses down the road, it may limit some benefits.”

Looking at the big picture, Webb said the credit union has not had to make any sweeping changes to its health plan.

“We have a pretty rich plan so there wasn’t anything we had to really change in order to comply,” Webb said.

Indeed, perhaps the most remarkable thing about health care reform for the mid-sized and larger credit unions with 50 or more employees is not what’s changing, but what’s not, said John Harris, CEO of CU Insurance & Benefits Alliance, a Salem, Ore.-based CUSO owned by 18 credit unions.

“We’ve seen no evidence of mid-sized or larger credit unions planning to drop group coverage to send employees to the public exchanges,” Harris said. “In fact, CU Benefits Alliance has not heard this from a single credit union client that plans to stop offering group benefits.”

One reason why credit unions may stick with group health plans is what Harris described as the “pay versus play” analysis; meaning, it’s less expensive to keep playing. Another reason is in order to attract and retain talented employees, health insurance will remain a required piece of the recruitment lure, he added.

Under PPACA, part-time employees have a bit more leverage. If they work 30 hours or more, employers are required to offer them health insurance, Harris said. Smaller credit unions with fewer than 50 employees will also have access to exchanges similar to the one launched by the Iowa and Nebraska credit union leagues and CoOportunity Health.

Working through broker Group Benefits Ltd., the 180 credit unions in both states can offer health services including a credit union health savings account when a prospect enrolls in a qualified high-deductible plan through CoOportunity Health.

“Credit unions know that financial well-being is directly linked to overall health and well-being. We believe this link will only increase in the months and years ahead,” said Patrick Jury, president/CEO of the Iowa league.

Harris said the PPACA is certainly an opportunity to educate credit unions, given the deluge of information on the new law. His CUSO provides regular updates and compliance deadlines.

Webb said aligning with CUSOs and other industry partners can also help credit unions find savings in coverage costs. SMCU has worked with CU Insurance & Benefits Alliance for two years. She said when the credit union was a fully insured plan with another provider, it paid $900,000 a month, regardless if anyone was sick or not.

“We didn’t know if money went to claims or someone’s pockets. The last couple of years, we’ve had a partially insured plan and with very few incidents, we’re not paying as much in health care and we still cover 100%,” Webb said.